Sponsored Content from WFG Lender Services: The Key to Lender Success: Borrower Satisfaction

A strong revenue spike can often distract us from unresolved but significant operational problems. We’ve seen this many times in our industry. High volumes and higher profitability will lead many lenders to assume that they have overcome old challenges. And yet, there are still problems to be solved, many of them long-standing.

With mortgage volumes as high as they are today, some of these challenges are growing more serious.

The industry saw this very clearly one year ago when the 2019 Primary Mortgage Origination Satisfaction Study was released by J.D. Power & Associates. As reported in HousingWire at the time:

“Overall borrower satisfaction fell from 869 (on a 1,000-point scale) in the first quarter [2019] to 853 in the second quarter. At the same time, mortgage originations rose 54 percent from the first quarter to the second quarter. So, as mortgage originations went up, borrower satisfaction went down.”

In a recent survey of WFG Lender Services clients (WFG), mortgage lenders identified staffing and capacity issues as the most common challenges they currently experience. Lenders don’t have the staff to keep up, but are stretching to increase their capacity to handle historic loan volumes. The price for failure is high and will be paid in reduced borrower satisfaction.

Consequently, lenders are investing heavily in digital technologies to become more competitive and stave off the threat of Fintech firms, digitally advanced nonbanks, and alternative lenders that have disrupted the mortgage process by transforming the application process and, to an extent, digitizing and automating underwriting and closing. Studies have shown that borrowers prefer a digital experience, and this strategy serves two ends.

Despite these investments, lenders are still finding it difficult to meet the expectations of borrowers, who crave a digital process, but easily become dissatisfied if their questions are not answered quickly. If lenders can’t find a way to keep borrowers satisfied, they will lose out to competitors who can.

But this is also one of the industry’s greatest opportunities. When McKinsey & Company studied customer satisfaction, the company found that maximizing customer satisfaction has the potential to lift revenue by as much as 15 percent, at the same time it lowers the cost of servicing customers by as much as 20 percent. That’s a significant benefit.

Moving the Lever on Borrower Satisfaction

So what does it take to really increase customer satisfaction in the mortgage lending business?

In WFG’s experience, and in survey results provided by its customers, the company found that the back and forth between the lender and the title company as they work to move a flood of deals to the closing table is leaving borrowers uncertain and dissatisfied. It is also draining the time and attention of loan officers and assistants (not to mention real estate agents and escrow officers) – time that could be spent winning new business or pushing existing transactions forward to closing.

The industry needs a better method to communicate the changing status of a pending mortgage loan to its partners and other involved parties. Borrowers are demanding better understanding of what’s happening with their loan transaction and how changes will impact their closing. When borrowers get answers quickly, their satisfaction increases.

But in an environment where loan volumes are rising so rapidly, how can lenders and their settlement services partners efficiently gather and process all of the information required to keep the loan moving smoothly to close and still keep borrowers in the loop?

This is a real challenge for purchase money lenders who must please both their borrowers and their business referral partners. But keeping a deal on track can be an even bigger challenge for refinance transactions, which don’t include a real estate sales partner to apply pressure.

There are currently 19 million borrowers who could refinance their loans today, but there is no way lenders would be able to keep up. The industry just doesn’t have that type of capacity without some sort of help.

In Search of a Better Solution for Industry Communication

Since its founding in 2010, WFG has partnered with mortgage lenders of all sizes nationwide, providing title, closing and settlement services, and finding new ways to take time and cost out of the transaction. The firm has witnessed the challenges that lenders and consumers face when it comes to effective communication.

WFG also knows the high cost of ineffective communication and its negative impacts on the cost to originate, borrower satisfaction, and the ability to close the loan on time. Company clients have regularly lamented the amount of time and energy their consumer-facing staff have devoted to repeatedly answering variations of one simple question: “What’s the status of my loan?”

After a careful analysis of the problem, WFG identified a set of requirements for a solution. The ultimate answer would not be a pure technology solution, but would necessarily include technology and a process to connect the various parties.

Ultimately, the right solution would offer:

Easy and accurate communication between all parties.

All transaction-related information, including information provided by the borrowers, should be saved in a centralized database, providing access to all parties. Borrowers should never have to search for the information they want, and the system should automatically update the transaction’s status.

A simple and intuitive user interface.

Lenders and borrowers alike, at the heart of it, desire a solution that is simple, rich, easy-to-use, and easy-to-access.

A tech-agnostic solution.

It couldn’t be hard-coded into another piece of technology that would limit its use by other parties, and thus restrict the functionality available to the consumer. To provide the most value, it would be essential to distribute and brand the offering to many third parties that could offer additional reach to consumers and industry participants.

Capable of taking time and cost out of the transaction.

Without the ability to actually help lenders increase their lending capacity, lower their costs, and decrease the time to close, lenders would not embrace the solution. To accomplish this, the solution must be capable of collecting data required to close the loan from the borrower with minimum intervention.

A New Solution for Industry Communication

Given the dramatic need in the industry to better communicate status to the various parties and the requirements outlined above for a complete solution, can any industry offering meet this need? It appears that it can.

As a direct result of the company’s analysis of the problem, WFG released MyHome® Exchange, a web-based application designed to deliver pre- and post-closing home information that provides contact data and enables the borrower to upload required documentation.

MyHome Exchange provides lenders with real-time updates through email upon completion of key milestones. In doing so, it brings participants in the mortgage transaction together within a single, easy-to-use ecosystem, enhancing communication, transparency, and the borrower experience.

The key is the improved borrower experience. As McKinsey & Company research revealed, this will have a positive impact on the lender’s bottom line. It will also increase the likelihood that the borrower will return to the lender and refer them to others.

Even though the mortgage industry is currently enjoying record origination volume (and revenue), there’s always room for improvement. This is especially true when it comes to improving the borrower experience, as well as making production more efficient. The rise of web-based applications like MyHome Exchange to address some of our oldest challenges is a powerful indicator that the mortgage industry sees this, and is evolving to solve them.

For more information on MyHome® Exchange or to download our new white paper, visit: https://wfgls.com/products-and-services/myhome-exchange/.